Student lets have always been their own niche market. With many properties falling into the class of HMOs where there are multiple unrelated students sharing a home, and students tending to require accommodation specifically for an academic year, landlords have had to operate in a particular way to let legally and optimise their rental profits.
One common practice has been requiring student tenants to commit to a 12-month fixed term contract, as it can be incredibly difficult to re-let a student property during the academic year. Many landlords have also been used to issuing tenants with a section 21 notice to ensure the property will be vacant for re-letting at the start of the new academic year.
But now that the most significant measures in the Renters’ Rights Act (RRA) have come into force, these two key practices are no longer possible. So, how can you ensure your student rental continues to be not only viable but profitable, and what are the other ways that the RRA has impacted student lets?
Here are the most common questions we’ve received from landlords of student properties, along with our advice on how to navigate the market under the RRA.
Q. Are all student lets affected?
A. University-owned student accommodation and purpose-built student accommodation (PBSA) are not affected in the same way as they fall outside the scope of the RRA. But all other private sector student lets are subject to the new laws.
Q. Can I still ask students to commit to rent for the whole year?
A. No. Fixed-term tenancies (ASTs) have been abolished and replaced with assured periodic tenancies (APTs) that ‘roll’ from one month to the next, and tenants can give two months’ notice at any time.
Q. How can I mitigate the risk of students leaving and not being able to re-let the property?
A. One of the biggest risks for landlords is that if student tenants leave after the academic year has started, it could be tricky to replace them. You can mitigate the risk by ensuring a good relationship with your tenants and responding to them quickly, or have a qualified and experienced agent to look after your let.
Q. Can I take rent in advance when students get their grants?
A. Rent in advance is limited to one month’s rent under the RRA. However, while you can’t demand advance payments, if the tenant offers to pay a lump sum, you can accept it without breaching the Tenant Fees Act. Rent in advance is only permissible after month one has been paid and there must be evidence of a tenants’ request.
Q. If I can’t take rent in advance and can’t have a 12-month contract, what can I do to be sure the rent is paid?
A. It’s also always been fairly common practice to ask students for a guarantor – usually a parent or guardian - and you can still do that. You can also look into taking out rent guarantee insurance in the rare case that a guarantor is not available or defaults.
Q. How can I regain possession of my property if section 21 doesn’t exist any more?
A. Under the RRA, there is a new section 8 possession ground 4A that allows landlords of student HMOs to give notice between 1st June and 30th September each year. This allows you to regain possession in time to re-let for the new academic year, with a 4-month notice period. However, if you want to use this ground, you must:
a. Give notice before the tenancy begins that this ground might be used, and
b. Ensure the tenancy was not granted more than six months before it begins – i.e. you can’t sign up students more than six months early for the next academic year.
If your student let is not an HMO, you will have to adhere to the same rules as any other private rental property, i.e. you won’t be able to regain possession unless you have a valid section 8 ground. So it is now even more important to have a good relationship with your tenants, or have a qualified and experienced agent to look after your let so you can understand their plans for the following academic year – whether they’ll want to stay in the property or leave – so you can make plans for re-letting.
The reality is that students are keen to have solid plans for where they’ll be living each year. As such, we don’t anticipate the loss of section 21 to be as big an issue as some have been suggesting.
Q. Can I still grant a student tenancy more than six months in advance?
A. It has been quite common in the past for students to secure accommodation for the following academic year as early as Christmas. You can still do that, but you will not be able to use ground 4A to regain possession from those tenants. So, if you have an HMO and want to retain the right to use that ground, you will have to wait until April/May to sign up new tenants. It’s worth noting the six-month period on student HMOs is triggered from when the tenancy was executed which may differ from when the let was agreed or begins.
If you currently let to students or you’re thinking of entering the market, our lettings experts are here to help. This is less straightforward than the ‘standard’ rental market, and it is essential to understand the specific laws that apply and management practices that will help ensure successful student tenancies.
Particularly while the RRA is still in its infancy, it’s advisable to work with qualified experts that have training and legal support. Click here to find your nearest branch, and have a chat with one of the team.
